DGL Market Update #1
Happy New Year! January has certainly kicked off with a bang with us being awarded he BIFA Freight Forwarding Award for Ocean Services. The new year has also brought a host of challenges and developments for the shipping industry.
After weeks of uncertainty, a last-minute deal was reached between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX), averting potential port strikes that could have caused major disruptions. Meanwhile, the inauguration of President Trump has added another layer of speculation to the mix, with concerns over potential tariff increases that could reshape trade flows, shipping patterns, and volumes.
As always, Chinese New Year is bringing its familiar peaks and troughs in volume and shipping rates. And let’s not forget the launch of the new Shipping Alliances on February 1st – what impact will this have on the industry?
It’s shaping up to be a dynamic start to the year, and we’ll be keeping a close eye on how these developments unfold.
The Gemini Cooperation Agreement between Maersk and Hapag-Lloyd, approved by the US Federal Maritime Commission (FMC) in September 2024, is a high-profile vessel-sharing deal aimed at improving schedule reliability and operational efficiency.
The collaboration involves 340 vessels (3.4 million TEU capacity) and focuses on key trades between the US, Asia, the Middle East, and Europe, leveraging 12 major hubs for transshipment, including terminals owned by both companies.
Key highlights include:
A 90% schedule reliability target supported by investments in terminal capacity, digital tools like IoT and AI, and tighter data integration.
Two network options: Trans-Suez and Cape of Good Hope (phasing in February 2025 due to disruptions in the Red Sea). Focus on service quality over quantity, with fewer but more reliable services.
Industry Impact
The success of Gemini could inspire other alliances to adopt similar strategies, potentially reshaping the industry. Skepticism remains due to the complexity of achieving such reliability, particularly given global uncertainties.
Broader Context
Other alliances, including the Premier Alliance (HMM, ONE, and Yang Ming) and MSC’s standalone network, are also restructuring to compete, with MSC solidifying its market leadership through fleet expansion and new partnerships.
The industry is watching closely as Gemini aims to set a new standard for efficiency and reliability in container shipping.
SCFI / Industry Overview
In early January, the Shanghai Shipping Exchange (SCFI) reported a 1.8% increase, reaching 2505.17 points, driven by steady freight rate growth on U.S. routes over the previous four weeks. However, European routes saw a slight decline, with rates from Shanghai to European ports falling 3.7% to $2,851/TEU. This drop is expected to continue for at least 10 weeks, influenced by seasonal factors and reduced demand ahead of the Chinese New Year (CNY), as factories shut down and carriers reduce capacity through blank sailings to maintain price stability.
With CNY, freight rates across major routes have generally dropped, including an 8.56% decline in the SCFI, which ended a six-day streak of increases. Rates from Shanghai to the U.S. West Coast fell by 6.3%, while those to the U.S. East Coast dropped 2.9%. European routes, including those to the Mediterranean, saw similar decreases. Liner companies like Maersk and MSC are cutting rates to fill vessels during the slower post-CNY period, while also offering long-term contracts and adjusting capacity. Ocean Alliance is responding to market shifts by launching new services and increasing capacity with new routes starting in April from the Far East to Europe and the U.S.
Asia-Europe Shipping Outlook for 2025: Key Developments and Challenges Ahead
As we look to 2025, the big question for the Asia-Europe shipping route remains: will full shipping resumption through the Suez Canal occur in the first half of the year?
Current expectations suggest a recovery may be more likely in the second half. Until then, the Red Sea detour continues to play a significant role, influencing both freight rates and overall market dynamics. While the diversion around Africa has eased some overcapacity concerns for carriers, it has also posed challenges for shippers due to longer transit times. The medium-term outlook anticipates a 3-4% increase in volume on the Asia-Europe route, despite a 6.7% rise in capacity. This diversion to the Red Sea is expected to persist at least until August.
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Meanwhile, a ceasefire deal between Israel and Hamas has brought hopes of stability and a potential return of ocean container ships to the Red Sea. However, experts caution against an immediate full-scale return, as the region may still experience disruptions. Analysts predict that an influx of ships could lead to delays, congestion, and a potential collapse in freight rates due to oversupply and shorter global sailing distances. While carriers are likely to begin resuming operations gradually, starting with smaller vessels, the shipping industry remains cautious about re-entering the region. Shippers will need to navigate these shifting conditions and adjust their supply chains accordingly.
Houthi’s Ceasefire for Israeli owned vessels
The announcement comes as a new ceasefire agreement between Israel and Hamas came into effect Sunday 19th January. The Yemen Houthi movement, who have been carrying out armed attacks against international merchant fleets in the Red Sea area since November 2023, will cease attacks on non-Israeli ships.
Recent Developments
Sustainability
We recently appointed a Head of Sustainability this marks an exciting chapter in the groups sustainability journey and advancing DGL’s customer sustainability solutions. Read our overview of COP29, the UN Climate Change Conference here.
We can help businesses assess and reduce their environmental impact with innovative technology and expert partners, delivering tailored solutions for a more sustainable future. For information on how we help click here.
New S&S GB Portal Live!
Now that the waiver for supplying the Safety and Security (S&S) Declarations ended on the 31.1.2025 and the requirement to submit a S&S ENS to S&S GB has come into effect, we are pleased to announce that DGL’s S&S GB Portal is live. Our Portal is available 24/7 providing access to remain complaint within the legal time frames. Its simple user-friendly interface allows customers to ensure accurate, compliant submissions whilst saving time with the ENS Declarations electronically submitted directly to S&S GB. For more information, please contact your DGL representative or contact us today!
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Our News
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Reference Sources: Shipping Watch / Market Insights / The Loadstar / Lloyds List / Reuters
Business Developer / Writer
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